Chapters 12 & 19 – Flashcards
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What type of industries should be subjected to industrial regulation?
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Natural monopolies correct
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Pure monopolists may obtain economic profits in the long run because:
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of barriers to entry.
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The demand curve faced by a pure monopolist:
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is less elastic than that faced by a single purely competitive firm.
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The practice of price discrimination is associated with pure monopoly because:
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monopolists have considerable ability to control output and price.
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If a monopolist engages in price discrimination, it will:
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charge a higher price where individual demand is inelastic and a lower price where individual demand is elastic.
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Large minimum efficient scale of plant combined with limited market demand may lead to:
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natural monopoly.
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A nondiscriminating profit-maximizing monopolist:
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will never produce in the output range where demand is inelastic.
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If a pure monopolist is operating in a range of output where demand is elastic:
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marginal revenue will be positive but declining.
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An unregulated pure monopolist will maximize profits by producing that output at which:
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MR = MC.
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Economic profit in the long run is:
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possible for a pure monopoly but not for a pure competitor.
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At its profit-maximizing output, a pure nondiscriminating monopolist achieves:
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neither productive efficiency nor allocative efficiency.
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In which one of the following market models is X-inefficiency least likely to be present?
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Pure competition.
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Which of the following is least likely to violate the Sherman Act or the Clayton Act?
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Competitive firms F and G independently charge lower prices to frequent customers than to occasional customers.
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The Sherman Act was designed to:
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make monopoly and acts that restrain trade illegal.
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The antitrust laws are based on the
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idea that competition leads to greater economic efficiency than does a monopoly.
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Which one of the following is most likely to increase the Herfindahl index of a particular industry?
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A horizontal merger
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Section 1 of the Sherman Act
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"Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations is declared to be illegal."
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Section 2 of the Sherman Act
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"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a felony" (as later amended from "misdemeanor").
